The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

The Joy of Stimulus

11/29/2016

The Organization of Economic Cooperation and Development (OECD) was not created for the sole purpose of criticizing the United States.  It just seems that way. It is an outgrowth from the Marshall Plan, which oversaw the allocation of American aid to rebuild Europe.  Based in Paris, it was officially established in 1961 with 35 member-nations … Continue reading The Joy of Stimulus

Emotional Void

11/27/2016

It was early in 1960, when I was a boy, that I recall studying the photographs in the now-defunct Life magazine about the dashing young lawyer named Fidel Castro, who ousted a corrupt dictator named Batista.  My father told me that the corrupt dictator was taking from the poor and giving to the rich.  In later … Continue reading Emotional Void

The Mystery of Thanksgiving

11/24/2016

I remember hearing a sermon about ThanksgivingThe minister didn’t give thanks . . .for food or family. Instead,he was thankful forhis freedom to worship . . . or not,his freedom to pray . . . or not, andhis freedom to give thanks . . . or not. He said the mystery of Thanksgiving ishow is … Continue reading The Mystery of Thanksgiving

Financing Stimulus

11/23/2016

With the stock market in record high territory, you can guess the most common question:  Is it time to sell?  No, the stock market is high, but it is not nose-bleed high.  While the charts for the Dow, S&P, and Russell are all similar, the chart for the Nasdaq is easier to see.  Take a … Continue reading Financing Stimulus

Long-Running Debate

11/22/2016

One of the longest running debates in the investment community is whether passive investing is “better” than active investing.  Passive investing involves trying to match a stock market index, such as the S&P 500 or the Nasdaq.  Examples would be exchange-traded funds (ETFs) such as SPY or QQQ.  Active investing tries to do better than … Continue reading Long-Running Debate

The Power of Positivity

11/19/2016

Many of us were raised in austere, utilitarian households, where frivolity was discouraged.  Your life should also be austere and utilitarian.  There was little need for others in your life, aside from the obviously utilitarian value of procreation.   Hermits were respected. Education also isolated us from each other by increasing our cynicism, especially the … Continue reading The Power of Positivity

“Smartest” Expectations

11/18/2016

The “Smartest People on Wall Street” were also surprised by the Trump election but have recovered enough to issue ten themes or expectations that might inform your investing decisions: “Expected returns: Only slightly higher.”  (Probably!) “US fiscal policy: A pro-growth agenda.”  (Only in the short-term  . . ) “US trade policy: Concerns are likely overdone.” … Continue reading “Smartest” Expectations

Historical Clue

11/16/2016

We tend to confuse normal business cycles with rallies.  A business cycle reflects the expansionary and recessionary phases of the economy, usually in the neighborhood of four-to-six years.  A rally refers to a recovering stock market (which should not be confused with economy) that occurs after a 30% decline in stock prices.  In the last … Continue reading Historical Clue

MP = EPS X PE

11/15/2016

The Market Price (MP) of a stock is equal to Earnings-Per-Share (EPS) times the Price-Earnings (PE) ratio. Conservative pundit and serious Supply-sider Larry Kudlow is fond of saying that “corporate earnings is the Mother’s milk of stock prices.”  As corporate earnings increase, market prices should logically increase.  (EPS is nothing more than the corporate earnings … Continue reading MP = EPS X PE

Change or Anti-change

11/13/2016

Aleksandr Dugin is a Russian political scientist and has been given credit/blame for convincing Putin to invade the Ukraine.  Indeed, he has been called “Putin’s Brain” by the highly-respected Foreign Affairs.  Born in 1962, his father was a lawyer and senior military intelligence officer, while his mother was a doctor.  Dugin eventually earned a PhD … Continue reading Change or Anti-change

Prediction Post-Mortem

11/12/2016

As is normal, I’ve been getting some ribbing about my election forecast that an unexpected Trump victory would cause the Dow to drop 500 points before rebounding in a week.  This prediction was informed by the Brexit election in late June, where the pundits were wrong, and the FTSE tanked, only to be normal a … Continue reading Prediction Post-Mortem

Over-reacting to a Reaction ?

11/11/2016

How can the stock market have a strong Clinton rally, followed by a strong Trump rally? One explanation of stock market behavior is uncertainty.  When the market thought Clinton would win, uncertainty decreased, driving up the market.  But, didn’t uncertainty increase with a Trump victory?  Maybe not? Another explanation is the “true-believer” argument, i.e., that … Continue reading Over-reacting to a Reaction ?

The Morning After . . .

11/09/2016

I confess to believing that Clinton would win the election.  So did Wall Street!  The bloody aftermath today proves that.  Readers will remember that I predicted, in the unlikely event of a Trump win,  an immediate 500 point drop in the Dow, followed by a Brexit-like recovery in a week or two.  I still believe … Continue reading The Morning After . . .

Celebration of Hyperbole

11/05/2016

Next Tuesday, I’ll vote in a presidential election for the 13th time.  In every single election, it was described as the most important election in American history.  Yet, after every single election, America survived. In every single election, my family has advised me that my vote should be for the “lessor of two evils.”  In … Continue reading Celebration of Hyperbole

Get Out !!

11/04/2016

Some people get songs in their head and hear those songs constantly.  Some thoughts get caught in my head, and I wish I could get them out. For example, Turkish President Erdogan said “democracy is like a street car – when you get to your stop, you get off.”  What does that mean?  Where is … Continue reading Get Out !!

Get It Over With !

11/03/2016

It’s not nice to fool Mother Nature . . . nor the stock market, which hates uncertainty. I’ve written that the stock market has believed that Clinton would win the election since late Springtime.  In fact, I predicted a 500-point drop in the Dow the next day, if Trump pulled-off an unexpected win.  During that … Continue reading Get It Over With !

Big Trouble in Big D ?

11/02/2016

Back during the 1980’s, I was a vice president with New York-based Citicorp, primarily lending for large commercial construction projects in Texas, whose economy was booming at the time.  I’m proud to have financed construction of the iconic Infomart with $92 million of strip-funded eurodollars (see pic), as well as the very first Wyndam Hotel. … Continue reading Big Trouble in Big D ?

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